Cloud-native BSS start-up Totogi has received a $100 million investment from Telco DR and has unveiled its Totogi Charging System. The company claims this to be the first “webscale” real-time charging and plan design engine for telcos.
Throwing down the gauntlet to established vendors, it points out that while Oracle has been benchmarked at 130,000 transactions per second and Matrixx Software at 200,000 transactions, it can handle more than a million. Moreover, the company says it will double this speed every six months.
Totogi has purpose-built its charging and BSS systems specifically for the public cloud, meaning they can be accessed via the web without the need to install anything on-prem. The company argues that this eliminates the need for capacity and disaster recovery planning, as the system scales and fails over automatically. It advocates that this approach delivers the cost benefits of the hyperscalers resulting in cost savings of up to 80% compared to on-premise or private cloud alternatives.
Danielle Royston, Acting CEO, as well as the driving force behind the investment, said: “Totogi represents everything I’ve been talking about over the past few years about the public cloud. Totogi is entering the market with a webscale platform that can do for telcos what Salesforce did for CRM in the early 2000s”.
Notably, Totogi is not just innovating on tech, but also on the business model by using a form of freemium model that will see service providers get the first 500 million transactions per month (for the charging engine) or the first 500 million API calls (for the BSS solution) for free.
Having read the Totogi news, you’re probably wondering two things now. Firstly, on the pricing side, is there a catch? According to Royston, there isn’t. She says tier 3 operators with under 250,000 customers might very well be able to get an entirely free service. Secondly, what does this mean for the established charging and BSS vendors?
When we asked such vendors for comment, little was forthcoming. Cerillion’s Dominic Smith did tell us that he thought it was refreshing to see a new entrant trying to shake up the market, and Cerillion was already on board with a public cloud vision for BSS. However, it should be noted that Cerillion differs from Royston in that they support choice over how and when their customers move to the cloud, while Totogi has a public cloud-only model. Tellingly, Smith commented: “The idea of a freemium style model with a free entry-level tier is not new and always begs the question as to at what point investment dries up, or freemium becomes premium.”
We agree with Smith’s position. There is no guarantee that free today stays free tomorrow, and there is no such thing as an entirely free lunch. There are other costs beyond the transactional costs of a charging or billing system that are likely to be chargeable and, in any case, if a vendor can’t make money, it can’t support its customers or innovate its product when its investment cash runs out.
When asked for her response on this point, Royston has confirmed that Totogi intends to retain a free tier in perpetuity. “We will always have a free tier,” she said. “That’s a tradition with public cloud vendors, and we will keep it.”
However, to some extent, these objections miss the point. While Royston focuses her initial arguments on lowering costs, clearly as a ploy to gain attention and get the conversation started, we cannot blame her for this. A new BSS player needs to make a bold move to get those all-important first logos in such an established market. There is also nothing new in ambitious players subsidising operators to build their reference deck.
Royston challenges the status quo by showing that a technically competitive product doesn’t have to incur a premium price. But we would argue that other issues – such as flexibility to respond to competitors, ease-of-use for marketers to define new price plans and bundles, and a reduction in the time-to-market for new products – all trump OPEX. We would like to hear more about these from Totogi in due course.
The one thing that disappointed us amid all the iconoclasm, though, is the innovation mindset presented by Totogi. A little like a rockstar who secretly drinks sherry and likes to play golf at the weekends, Totogi still presents an organisation-centric view of the world, at least in interviews and statements to date.
We agree wholeheartedly with them that greater personalisation is required, but we don’t think that “operators know their customers better than anyone else”. In fact, customers know themselves better than anyone else. Using data more effectively to create individualised offers (as Royston says Auto Plan will do) is a big step in the right direction. Still, it needs to go beyond this to enable smarter customer self-bundling and pricing. Historic data – no matter how current – still doesn’t tell the whole picture and will always be one step behind customers’ plans. We need both.